BC
Brunswick Corporation
$70.72
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 115.7% above fair value
You pay
$70.72
Bear
$23.84
Fair
$32.78
Bull
$41.72
Bear
$23.84
-66.3%
$5.96 × 4x
Fair
$32.78
-53.6%
$5.96 × 6x
Bull
$41.72
-41.0%
$5.96 × 7x
Adjust Assumptions
5.5x
5.96$
Key Value Driver
Through-cycle normalized EPS ($5.96)
Implied Market Multiple
11.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (31 analysts)
$91.50
Divergence from AlphaVal
64%
Summary
Using 7-year normalized EPS of $5.96 at a 6x cycle multiple, the base-case value is $32.78 per share. P/TBV cross-check: 51.3x.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 51.3x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $91.50 (from 31 analysts). Our estimate is 64% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing